Ethics Panel Adjudication for Matthew Schwenk

InRe: MatthewSchwenk, : FileDocket: 13-008Respondent : X-ref: OrderNo. 1641

DateDecided: 6/16/14DateMailed: 7/10/14

Before: JohnJ. Bolger, ChairNicholasA. Colafella, ViceChairRaquelK. BergenMarkR. CorriganRogerNickKathrynStreeterLewisMariaFeeley

ThisisafinaladjudicationoftheStateEthicsCommission.

Procedurally, theInvestigativeDivisionoftheStateEthicsCommissionconductedaninvestigationregardingpossibleviolation(s) ofthePublicOfficialandEmployeeEthicsAct (“EthicsAct”), 65Pa.C.S. § 1101etseq., bytheabove-namedRespondent. Atthecommencementofitsinvestigation, theInvestigativeDivisionserveduponRespondentwrittennoticeofthespecificallegations. Uponcompletionofitsinvestigation, theInvestigativeDivisionissuedandserveduponRespondentaFindingsReportidentifiedasan “InvestigativeComplaint.” AStipulationofFindingsandaConsentAgreementweresubsequentlysubmittedbythepartiestotheCommissionforconsideration. TheStipulatedFindingsaresetforthastheFindingsinthisOrder. TheConsentAgreementhasbeenapproved.

I. ALLEGATIONS:

ThatMatthewSchwenk, apublicofficial/publicemployeeinhiscapacityasDirectorofProductSelectionforthePennsylvaniaLiquorControlBoard (“PLCB”) violatedSections1103(a) and1105(b) oftheStateEthicsAct (Act93of1998), 65Pa.C.S. §§ 1103(a) and1105(b), whenheusedtheauthorityofhispublicpositionfor \[the\] privatepecuniarybenefitofhimselfbysolicitingand/oracceptingitemsofvaluefromvendorsofthePLCBatatimewhenhewasresponsiblefor, andparticipatedin, PLCBdecisionstoplacevendorproductsinPLCBliquorstores; whenhesolicitedand/oracceptedtravel/hospitality/lodgingfromCommonwealthvendors; andwhenhefailedtodiscloseonStatementsofFinancialInterestshisreceiptofgifts, transportation, lodgingandhospitalityforcalendaryears2010through2012.

II. FINDINGS:

1. MatthewSchwenkservedastheDirectorofProductSelectionforthePLCBfromapproximatelyJuly2010untilJanuary2013.

a. SchwenkbeganemploymentwiththePLCBin2004, asafull-timeclerktypist.

Schwenk, 13-008Page2

1. SchwenkbeganemploymentwiththeCommonwealthwiththeDepartmentofLabor & Industryasatemporaryclericalpoolemployee.

b. SchwenkheldmultiplepositionsduringhistenurewiththePLCBincludingClerk, ManagementAnalyst, MerchandisingandPricingCoordinator, andChiefofCategoryManagement.

1. SchwenkreceivedmultiplepromotionsthroughouthistenurewiththePLCB.

2. Schwenk’sjobdescriptionforthepositionofDirectorofProductSelectionforthePLCBincludedthefollowingresponsibilitiesandduties:

a. Planning, developing, directing, andcoordinatingthePLCB’scomprehensivestatewidemarketingandmerchandisingprograms/functions;

1. Inthiscapacity, SchwenkreporteddirectlytoJamesShort, PLCBDirectorofMarketingandMerchandising.

b. Development, implementation, andevaluationofpoliciesandoperationalprocedurestoensuretheefficientmarketingofregularlylistedandluxurywineandspiritsproductsmadeavailableinWineandSpiritsstores;

c. Directionofacentralizedmarketingandmerchandisingprogramtosatisfycustomerandlicenseedemand, promoteproductselectionwhileenhancingprofit, andensurecompetitivepricing;

d. Advisingonproposedpolic\[y\] changesneededforimprovedcustomerserviceandagencyprofitability; and

e. Performanceofworkwithconsiderableindependencewithintheframeworkofapplicablelaws, regulations, andpolicieswithconsiderabledirectionexercisedinmakingadministrativeandprogramdecisionsunderthegeneraldirectionofanexecutivesupervisorwithworkreviewedthroughconferences, reports, andevaluationofresultsobtained.

f. Directionofthesupervisionoftheluxuryandcategorymanagementstaffintheestablishmentofmarketingprograms;

g. Oversightofspecialpricinganddisplayprogramsandcoordinateswithluxuryandcategorymanagementstaffintheimplementationofmarketingandmerchandisingplans;

h. Directionandapprovalofthedevelopmentofstandardsforpromotionalcampaigndisplaysandoversightofthepreparationofdocumentationfordistributionto, andtrainingof, fieldpersonnel;

i. Directionoftheplanningandimplementationofspaceprioritizationandlayoutofvariedproductsandbrandsfordisplayandpromotion;

j. Directionandevaluationofprofitabilityandmarginanalysiswithappropriaterecommendations;

k. PresentsanalysisofsupplierproposalstoaddproductsandmakesrecommendationstotheDirectorofMarketingforprospectivenewproductintroductionortrial, orrecommendationsfordiscontinuationofcurrently


offeredproducts;

l. Leadsnegotiationswithvendorsonproductpromotionproposalsinvolvingdiscounts, rebates, incentives, luxuryitems, orone-timebuys; and

m. Directsluxurywineandcategorymanagementstaffinthereviewandanalysisofspecialproductpromotions, includingthepricing, floorpositioning, advertising, andmarketingoftheseitems.

3. ThePLCBwascreatedbystatelawonNovember29, 1933, followingtheendofprohibition.

a. ProhibitionwasrepealedonDecember5, 1933, withtheratificationofthest21 AmendmenttotheU.S. Constitution.

b. Pennsylvaniaisoneofeighteen (18) statesandtwo (2) Marylandcountiesthatactivelyparticipateinthedistributionprocesstocontrolthesaleofalcohol.

4. ThePLCBisgovernedbyathree (3) MemberBoard, appointedbytheGovernorandconfirmedbytwo-thirdsoftheStateSenate.

a. TheBoardappointsaChiefExecutiveOfficer.

5. ThePLCBisresponsibleforregulatingthesaleofalcohol, educatingconsumersontheresponsibleuseofalcohol, andworkingtopreventunderageuseofalcoholicbeverages.

6. ThePLCBaccomplishesitsresponsibilitiesthroughmarketingandmerchandisingaretailoperationofapproximately608storeswithsalesofapproximately $2.1billionin2011-2012.

7. OnApril12, 1951, thePennsylvaniaGeneralAssemblycombinedexistingbeerandliquorlawsintoonestatute, entitledthe “LiquorCode.”

8. OnJuly1, 1987, thePennsylvaniaGeneralAssemblyreenactedtheLiquorCodeandcreatedtheBureauofLiquorControlEnforcement (“BLCE”), withinthePennsylvaniaStatePolice, whichisresponsibleforenforcingtheLiquorCodeandtheBoard’sregulations; andtheOfficeofAdministrativeLawJudge, anautonomousofficewithinthePLCB, whichisresponsibleforpresidingovercitationandenforcementhearings.

9. ThePLCBprovidesproductsandservicesthroughseven (7) dedicateddepartmentsdesignedtomeetthespecificneedsofPLCBcustomersandlicensees.

a. Eachoftheseven (7) dedicatedofficeshasspecificdeputieswhohaveoversightresponsibility.

b. Dedicatedofficesare: Finance, SupplyChain, Marketing & Merchandising, RetailOperations, Administration, RegulatorAffairs, andExternalAffairs.

10. ThePLCBisahighvolumepurchaserofwineandspiritsintheUnitedStates.

a. ThePLCBcurrentlyoperatesapproximately608stores, whichareleasedfromprivatelandlords.


b. ThePLCBoutsourceswarehousingservicesforthree (3) distributioncentersinPennsylvania.

c. Therecurrentlyareapproximately25,595beveragealcohollicensesandpermitsthroughoutPennsylvaniaand5,391registeredmaltandbrewedbeveragebrandsgrantedbythePLCB.

11. ProductsthataresoldbythePLCBarecategorizedaseitherregularitems, luxuryitems, orspecialorderitems.

a. Regularitemsareproductsthatareroutinelystockedinthedistributioncenters.

b. Luxuryitemsareproductsthatarepurchasedintermittentlyorasone-timepurchases.

c. SpecialorderproductsareitemsthatarenotstockedinthePLCBdistributioncentersbutmaybespecialorderedbyeitherlicenseesorbyconsumers.

d. OnoraboutFebruary4, 2004, thePLCBbegantheChairman’sSelectionProgram, whichofferswineatpremiumcollectionstores.

12. Inorabout2006, apolicywasdevelopedbythePLCBknownasthe “brightline.”

a. ThepolicywasdevelopedduringthetimewhenJosephMartzwasservingasPLCBDirectorofAdministration.

1. In2006, MartzsimultaneouslyservedasSecretaryoftheCommonwealthandPLCBDirectorofAdministration.

b. ThebrightlinewasapolicythatadvisedemployeestheyweretoacceptnothingfromPLCBvendors.

c. Wheninitiallyimplemented, thepolicywasapplicabletoemployeesoftheAdministrativeDivisionofthePLCB.

1. EmployeessignedthepolicyagreeingnottoacceptanythingfromPLCBvendors.

d. JonathanNewmanwasPLCBChairmanatthetimethepolicywasimplementedforadministrativestaff.

13. In2006, theDirectorofAdministrationhadnosupervisoryauthorityoveremployeesinthePurchasingDivision.

a. RequestsweremadetoJamesShort, PLCBDirectorofMarketing, toimplementthepolicyinthePurchasingDepartment.

b. Shortneverimplementedthepolicy.

14. AsaControlState, thePLCBistheonlyretailsellerofwine/spiritsintheCommonwealth.

a. ThePLCBmaygrantlicensestoentities/establishmentsforthesaleofalcoholicbeveragesforon-siteconsumptionaswellasforvendorswhosellproductsforoff-siteconsumption.


b. InorderforanalcoholicbeveragetobesoldinPennsylvania, itmustbeauthorizedforsalebythePLCB.

1. Ifaproductis “listed” itisauthorizedforsaleandstockedasaproductinPLCBretailstores.

15. InordertohaveaproductsoldbythePLCB, amanufacturer/supplierofalcoholicbeverageproductsmayemployseveral differentmethodstohaveits productrepresentedwithintheCommonwealthofPennsylvania.

a. Amanufacturer/suppliermaymarketitsproductdirectlytothePLCBforthelisting/delistingprocessaswellasforsalesanddistribution.

b. Amanufacturer/suppliermaymarketitsproductthroughavendor.

1. Forallsales/distribution, avendorofrecordmustbeidentifiedwiththePLCB.

2. Amanufacturer/suppliermayalsobeavendor/vendorofrecord.

c. Amanufacturer/suppliermayenlisttheservicesofabroker, whotheninturnrepresentsthemanufacturer/supplieranditsproductsbeforethePLCB.

1. Anybrokermayrepresentmultiplemanufacturers/suppliersand/ormultipleproductsbeforethePLCB.

2. Abrokermayalsoserveasavendor/vendorofrecord.

16. ThePLCBperiodicallyreviewsallproductscurrentlysoldinPLCBretailstorestoevaluatetheirprofitability, andat/oraboutthesametimeconsidersnewproductsforplacementinPLCBretailstoresthroughaprocessknownas “listing” anddelisting.” a. Listing/delistingoccurstwiceayear, usuallyinthefallandspringofeach

year.

b. Thegoaloflisting/delistingistoachievea1:1ratio, whenforeachproductlisted, oneproductisdelisted, duetothelimitedamountofshelfspaceavailableateachPLCBretailstore.

17. TheprocesstopresentanewproductforlistingisregulatedthroughthePLCB.

a. Oncetheappropriateapplicationhasbeensubmitted, aspecificdate/timewillbescheduledforavendor/brokertopresentnewproductstoMembersofthePLCB.

b. Generallytwo (2) bottlesofaproductareprovidedforsampling.

1. One (1) bottlefortastingandanotherforlabelreviewaresubmitted.

c. PLCB \[staff\] membersusuallyresponsibleforevaluatingnewproductare:

DirectorofMarketingandMerchandising

ChiefProductManagementandPricingDivision

MerchandisingPricingCoordinator(s)


d. Onceanewproductpresentationhasbeenmade, arecommendationwillbemadeastowhetherthenewproductshouldbelisted (soldinPLCBretailstores).

1. AreportofproductstobelistedisforwardedtotheCommissionersforapproval.

2. TheCommissionersdonotparticipateinthenewproductreviewprocess.

3. Commissionersvoteontheentirerecommendednewproductlist, withoutanyindependentreviewoftheproduct/supportdata.

4. TheDirectorofMarketingandMerchandisingalongwiththeChiefoftheProductManagementandPricingDivisionmakethefinalrecommendationtotheCommissionastowhatproduct(s) shouldbelistedforsale.

5. Luxurywinesandone-timebuys, includingtheChairman’sSelectionProgram, arenotsubjecttothelisting/delistingprocess.

18. Delistingoccurssimultaneouslywiththelistingprocess.

a. Thedelistingprocessisformallytermed “categorymanagement,” butiscommonlydescribedas “bucketing” or “filtration” process.

b. Ifaproductistobedelisted, thevendorisnotifiedandprovidedanopportunitytoavoidadelisting.

1. Actionssuchasanadvertisingcampaign, discounts, andproductsamplingareusedtopromotesalesandpossiblyavoidadelisting.

c. Recommendationsfordelistingaresimilartolistings, wheretheDirectorofMarketingandMerchandisingalongwiththeChiefoftheProductManagementandPricingDivisionmakethefinalrecommendationtotheCommissionastowhatproduct(s) shouldbedelisted.

19. ThePLCBreliesprimarilyonrecommendationsmadebyJamesShort, theDirectorofMarketingandMerchandising, andhissubordinates, includingSchwenkastheDirectorofProductSelection, whenmakinglisting/delistingdecisions.

a. TheBoardconductsnoindependentreviewofproductsandreliesonstaffrecommendations.

b. Itisestimatedthat5% oftherecommendationstolist/delistarenotacceptedbytheBoard.

20. TheprimaryvendorsprovidingproductstothePLCBare:

SouthernWineandSpiritsCapitalWineandSpirits (AllianceBrands, WhiteRockDistilleries) AlliedBeverage (Majestic) Thesevendorsrepresentatleast31% oftotalPLCBsales/inventory.

21. SouthernWineandSpiritsofAmerica, Inc. (“Southern”) \[claims\] tobethenation’slargestwineandspiritsdistributor.


a. Sinceitscreation/formationin1968, SouthernhasmaintaineditscorporateofficeinMiami, Florida.

b. Currently, Southernrepresentsclientsinnolessthanthirty-five (35) statesincluding “ControlStates” and “OpenStates.”

1. An “OpenState” referstoastate/jurisdictionwherewine, spirits, andbeersalesareconductedthroughanindependentbeveragedistributor/retailer.

2. A “ControlState” iswhereastateorcounty “controls” orregulatesthedistributionand/orthesaleofwine, spirits, and/orbeer.

3. PennsylvaniaisthelargestControlStateoperationintheUnitedStates.

22. SouthernWine & SpiritsofPennsylvaniaoperatesasalicensedwineandspiritsbroker/marketer.

a. SouthernexpandeditsoperationsintoPennsylvaniain1995.

b. Southernemploysapproximatelytwo-hundredtwenty-five (225) salesandsupportstaffstatewideinPennsylvania.

c. Southernmaintainstwo (2) officeswithinPennsylvania, oneintheKingofPrussiaarea, andtheotherintheGreaterPittsburghgeographicarea.

1. Theseemployeesareresponsibleformarketingandmerchandisingalcoholicbeveragestothemorethansix-hundred (600) PLCBstatestores, aswellasPennsylvania’s14,500on-premiseaccounts.

2. ThePLCBisSouthern’sonlyoff-premisecustomer.

23. BradM. Waxman (“Waxman”) istheExecutiveVicePresident, GeneralManagerofSouthernWine & SpiritsofPennsylvania.

a. InJanuary1999, WaxmaninitiatedhisemploymentwithSouthern.

1. In2002, WaxmanwasnamedExecutiveVicePresident/GeneralSalesManagerofSouthern’sPennsylvaniaoperations.

b. MarkSweeney (“Sweeney”) istheVicePresidentandGeneralManagerofNorthAmericanWineandSpirits, adivisionofSouthernWineandSpirits.

1. SweeneyalsomakessalescallstoPLCBofficialsandemployees.

2. In2008, WaxmanwaspromotedtothepositionofExecutiveVicePresident/GeneralManagerofSouthern’sPennsylvaniaoperations.

24. Southernisabrokerandvendor/vendorofrecordforanumberofwinesand/orspiritssoldtothePLCB.

a. WaxmanservesasabrokerforanumberoftheproductsbeforethePLCB.


b. ProductsforwhichSouthernservesasbrokerand/orvendor/vendorofrecordaccountforbetweenapproximately6.43% to6.85% ofPLCBtotalCostofGoodsSoldduringthelastfive (5) years (2007-2012).

1. SalestoPLCBforyears2007through2012totaledbetween62,051,980.00and $77,641,059.78.

25. CapitalWine & Spirits, LLC (“Capital”) claimstobeoneofthelargestwholesalers/brokersofwineandspiritsinPennsylvania.

a. CapitalisamemberoftheCharmerSunbeltGroup, anationwidedistributorofwine, spirits, beer, andotherbeverages.

b. TheCharmerSunbeltGroupisacollectionofprivatelyheldcompaniesandoperatesdistributor/brokeragehousesinnolessthanfifteen (15) states, includingPennsylvania.

c. Capitalemploysmorethantwo-hundred (200) employeesandreportstosellinexcessoffourmillioncasesofwineandspirits throughouttheCommonwealth.

d. Thereportedfourmillioncasesofwine/spiritsalesincludesalestothePLCB.

26. Capitalisabrokerandvendor/vendorofrecordforanumberofwinesand/orspiritssoldtothePLCB.

a. ProductsbrokeredbyCapitalaccountforatotalofbetweenapproximately19.11% to22.03% ofPLCBtotalCostofGoodsSoldduringthelastfive (5) years.

b. SalestothePLCBforyears2007through2012totaledbetween198,712,993.38and $221,606,618.99.

27. Inanefforttocondensemarketingeffortsandmaximizesalesandproductexposure, severalmanufacturers/producersofwines, spiritsandmalt/brewedbeverageshaveformedpartnershipsformarketingpurposes; onesuchpartnershipis “TheAlliance.”

a. TheAllianceiscomprisedofwine/spiritsuppliers: BacardiUSA (“Bacardi”); Brown-Forman; andRemyCointreau (“Remy”).

b. TheAlliancewasestablishedbyBacardi, Brown-Forman, andRemyto “re- shape” theirroutetomarketinordertoprovidegreaterserviceandaccesstotheconsumer.

c. ThegoalofTheAlliancewas/istocreateawayforBacardi, Brown-Forman, andRemytoleveragetheirscaleandprofitabilityinordertosecurededicatedresources.

28. TheAllianceisaUnitedStatesprogramandisfocusedondistributionandacombinedportfolioinanefforttocompetewithothersuppliers.

a. TheAlliancecoverstwenty-six (26) markets, whichinclude thestateofPennsylvania.

b. WithinPennsylvania, TheAllianceisrepresentedbyCapitalWine & Spirits/CharmerSunbeltGroup.


29. CapitalWineandSpirits/AllianceBrandsrepresentativesinteractingmostoftenwithPLCBofficialsincludethefollowing:

MarkLittles, President, CapitalWineandSpiritsChristinaDesmond, DirectorofMarketingandBusinessAnalyticsRobSirota, GeneralManager, AllianceDivisionofCapitalWineandSpiritsKevinMcCarty, Vice-PresidentofComplianceandAdministrationofCapitalWineandSpiritsTimKilcullen, Vice-PresidentofWineandEducation, CapitalWineandSpiritsDavidFranke (Brown-Forman)

30. AlliedBeverageGroup, LLC (“Allied”) wascreatedbythemergersofTheBaxterGroup, Inc., F&ADistributingCompanyandTheJaydorCorporation.

a. AlliedreportstobeNewJersey’slargestandmostcomprehensivewineandspiritsdistributorandranksamongthetenlargestdistributorsintheUnitedStates.

b. AlliedalsooperatessubsidiaryMajesticWine & Spirits, USA, LLCMajestic”), whichisaPennsylvaniabrokerageandvendor/vendorofrecord

forproductssoldtothePLCB.

1. Asabroker/vendor, Majesticprovidesmerchandisingandpromotionalservicesforseveralmajorsuppliersofalcoholicbeverages.

2. MajesticreportstobethePLCB’shighestvolumedistributorofspecialliquororders.”

31. Asabrokerandvendor/vendorofrecordforproductssoldtothePLCB, Alliedand/orMajestic’ssalesaccountforbetweenapproximately1.51% to2.18% ofPLCBtotalCostofGoodsSoldduringthelastfive (5) years.

a. SalestoPLCBforyears2007through2012totaledbetween $15,267,768.10and $25,000,032.79.

32. Majestic’ sprimarycontactswithPLCBofficialsandemployeesareChrisPaparielloandEdwardMurray.

a. PaparielloisExecutiveVice-PresidentofMajestic.

b. MurrayservesasMajestic’sEasternRegionalManager.

33. ExecutivesandmarketingrepresentativesfromvendorssupplyingproductstothePLCBmetwithPLCBemployeestomarketproducts.

a. Themarketstrategiesoftheserepresentativesincludedofferinggifts, transportation, lodging, andhospitalitytoPLCBemployees.

b. Theseitemsincludinggolfevents, meals, alcoholicbeverages, andgiftcardswereofferedyearroundincludingwhenlisting/delistingofproductswasoccurring.

c. ItemsofvaluewereroutinelyprovidedtoPLCBofficialswhowereindecisionmakingpositionsregardingproductselectionandplacement.


34. RepresentativesofthenumerousPLCBvendorsfrequentlycontactedSchwenkandvariousotherPLCBrepresentativestomarketnewandexistingproducts.

a. Someoftheseproductsweresubjecttothelisting/delistingprocess.

b. Otherproductswereluxuryproductswhicharenotsubjecttolisting/delistingprocedures.

c. Schwenk’sjobduties, attimes, includedmakingdeterminationswhereproductswouldbelocatedinstateliquorstores.

THEFOLLOWINGFINDINGSRELATETOSCHWENK’SRECEIPTOFGIFTSANDHOSPITALITYTHATHEWOULDNOTHAVEBEENINAPOSITIONTORECEIVEABSENTHISEMPLOYMENTWITHTHEPLCB.

35. RobertSirotaisemployedastheGeneralManager, AllianceDivision, forCapitalWineandSpirits.

a. Inhisposition, SirotaservesasthedirectliaisonbetweentheAlliancesuppliersandCapitalWineandSpirits.

b. SirotareportsdirectlytoMarkLittles, President, CapitalWineandSpirits.

36. Inorabout2009, theconceptforanAllianceGolfOpenwasconceivedas acollaborativeeffortbetweenSirotaandmembersoftheAlliance.

a. ThegolfoutingwasorganizedasameansbywhichCapitalWineandSpiritsandtheAlliancesupplierscouldstrengthentheirrelationshipwiththePLCBandtoallowvariousAllianceseniormanagementofficialstohave “facetime” withPLCBofficials.

37. SirotaservedastheCapitalWineandSpiritslead/pointofcontactinrelationtoorganizationoftheevent.

a. AlthoughSirotaservedastheeventlead, PLCBindividualstobeinvitedtotheeventweredeterminedasaresultofcollaborationbetweenSirota, Littles, ChristineDesmond (DirectorofMarketingandBusinessAnalytics, CapitalWineandSpirits), and/ortheAlliancesuppliers.

b. ActualinvitationstoPLCBofficialsfortheeventweremadebyLittlesand/orDesmond.

38. AllianceGolfOpeneventswereheldin2009, 2010, and2011.

a. SirotaservedastheCapitalWineandSpiritsleadfortheeventorganizationeachyear.

b. Inviteestotheeventweredeterminedinthesamemannerforeachyear.

c. Actualinvitationsfortheeventswerepresentedbythesameindividualsforeachyear.

39. AnAllianceGolfOpenwasinitiallyplannedforthe2012calendaryearbutultimatelywasnotheld.

a. The2012AllianceGolfOpenwascancelledasaresultoftheCommissioninvestigationinthismatterandpublishedmediaaccountsofthereceiptof


itemsofvaluebyPLCBemployeesfromPLCBvendors.

b. ThedecisiontocanceltheeventwasmadejointlyamongLittles, Desmond, andSirota.

40. The2009, 2010, and2011AllianceOpenswereone-dayeventsconsistingofmorningtravel (ifnecessary), awarmupsession, lunch, aroundofgolf (eighteenholes), anddinnerintheevening.

a. SirotadevelopedtheitineraryforeachrespectiveAllianceOpen.

b. NospecifictimeslotwasdesignatedforanyspecificbusinesspresentationbyCapitalWineandSpiritsand/ortheAlliancesuppliers.

c. NospecificbusinesspresentationsweremadebyCapitalWineandSpiritsand/ortheAlliancesuppliersattheevents.

d. Theeventwasprimarilysocialinnaturewithnospecificbusinessagenda.

41. Thecostsassociatedwiththe2009, 2010, and2011AllianceGolfOpenwerebornebytheAlliancesuppliersandCapitalWineandSpirits.

a. ThetotalcostsoftheeventsweredividedintofourequalamountstobepaidbyCapitalWineandSpirits, Bacardi, Brown-Forman, andRemy.

42. The2009AllianceGolfOpenwasheldattheWestShoreCountyClub, 100BrentwaterRoad, CampHill, PA17011, onWednesday, August19, 2009.

a. InadditiontoSchwenk, PLCBattendeeswereShortandCEOJoeConti.

b. SchwenkreporteddirectlytoJamesShort.

1. ShortisasubordinatetoPLCBCEOJoeConti.

c. Althoughtheeventwassocialinnature, Schwenkdidnotutilizeleaveofanykind (annualorpersonal) inassociationwithhisparticipationatthe2009AllianceOpen.

1. SchwenkattendedthiseventatthedirectionofhisSupervisor, JamesShort.

2. Schwenkbelievedtheeventwas “workrelated” ashewasadvisedtoattendbyShortandthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial.

d. Allexpensesassociatedwiththeevent, includingcocktailsanddinneraftertheevent, werepaidforbyCapitalWineandSpiritsand/ormembersoftheAlliance.

43. SirotareceivedabanquetinvoicefromtheWestShoreCountryClubfortheAugust19, 2009, AllianceGolfOpenintheamountof $1,324.06.

a. Theinvoicedidnotdocumentadateorinvoicenumber.

b. Theinvoicedocumentedtheclient/organizationasCapitalWineandSpirits.

c. Theinvoicedocumentedabreakdownofgolfchargesintheamountof


1,136.80andfoodandbeveragechargesintheamountof $187.261,324.06total).

d. ThecostoftheeventtoCapitalWineandSpiritsandeachAlliancesupplierwasapproximately $331.00 ($1,324.00 ÷ 4).

44. Additionalpurchasestotalingapproximately $147.17weremadebySirotaandDesmondforrefreshmentsinassociationwiththe2009AllianceOpen.

a. Sirota’sexpensereportdocumentedapurchaseintheamountof $67.17forthegolfouting.

b. Desmond’sexpensereportdocumentedapurchaseof $80.00forthegolfouting.

45. Expensesassociatedwiththe2009AllianceGolfOpentotaledatleast $1,471.23.

a. Thevalueofthegolfoutingbasedonamaximumofsixteenindividualsinattendancetotaledapproximately $105.09perindividual.

1. Greensfeescostsforthetwo (2) WSCCmembersarenotincludedastheywerenotassessedfees.

46. The2010AllianceGolfOpenwasheldattheRiverCrestGolfClub, 100GolfClubDrive, Phoenixville, PA19460onJuly15, 2010.

a. Theeventwasmoreinclusivethanthe2009eventbyprovidinglunch, cocktailsanddinner.

1. Fifteen (15) individualsparticipatedinthe2010AllianceOpen, includingthree (3) PLCBofficials/employees.

b. PLCBattendeesattheeventincludedSchwenk, Short, andP.J. StapletonPLCBChairmanatthattime.)

1 NeitherSchwenknorShortutilizedleaveofanykind (annualorpersonal) inassociationwiththeirrespectiveattendanceatthe2010AllianceOpen.

2. SchwenkwasdirectedtoattendthiseventbyhisSupervisor, JamesShort.

3. Schwenkbelievedtheeventwas “workrelated” ashewasdirectedtoattendbyShort, andthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial.

4. Allexpensesassociatedwiththeevent, includingcocktailsanddinneraftertheevent, werepaidforbyCapitalWineandSpiritsand/ormembersoftheAlliance.

47. SchwenksubmittedCommonwealthTravelExpenseVoucher (TEV) MS07152010datedJuly26, 2010, intheamountof $195.24fortravelandovernightexpensesfromHarrisburgtoSkippack, Pennsylvania, andNewHope, Pennsylvania, onJuly15, 2010, andfromSkippack, Pennsylvania, toHarrisburg, Pennsylvania, onJuly16, 2010.

a. SchwenksubmittedtheTEVatthedirectionofShort.


48. RecordsofCapitalWineandSpiritsinreferencetotheJuly15, 2010, AllianceGolfOpendocumentedexpensesincurredintheapproximateamountof $7,363.00.

a. ThedocumentmemorializingthecostoftheeventwasupdatedonJuly16, 2010.

b. Theinvoicedocumentedtheexpensebreakdownas:

Description CostsFood & Beverage $ 4,263.00Golf $ 1,280.00GolfSwagBags $ 1,600.00Forecaddies $ 220.00Total $ 7,363.00

c. ThecostoftheeventtoCapitalWineandSpiritsandeachAlliancesupplierwasapproximately $1,840.75 ($7,363.00 ÷ 4).

49. Thevalueofthegolfoutingbasedonamaximumoffifteen (15) individualsinattendancetotaledapproximately $490.87perindividual.

50. The2011AllianceGolfOpenwasheldatthePhiladelphiaCountryClub, 1601SpringMillRoad, Gladwyne, PA19035onJuly14, 2011.

a. PLCBattendeesattheeventincludedSchwenk, Short, Conti, Stapleton, andDougHitz, PLCBBureauDirectorforPlanningandProcurement.

b. Althoughtheeventwassocialinnature, neitherSchwenknoranyotherPLCBemployeesutilizedleaveofanykind (annualorpersonal) inassociationwiththeirrespectiveattendanceatthe2011AllianceOpen.

c. SchwenkwasauthorizedtoattendthiseventbyhisSupervisor, JamesShort.

d. Schwenkbelievedtheeventwas “workrelated” andthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial.

e. Allexpensesassociatedwiththeevent, includingcocktailsanddinneraftertheeventaswellasgolfshirts, hats, andgiftbags, werepaidforbyCapitalWineandSpiritsand/ormembersoftheAlliance.

51. SchwenksubmittedCommonwealthTravelExpenseVoucher (TEV) MS071511datedJuly20, 2011, intheamountof $130.20fortravelandovernightexpensestoPhiladelphia, Pennsylvania, onJuly14, 2011, returningtoHarrisburg, Pennsylvania, onJuly15, 2011.

a. TEVNo. MS071511wassubmittedandcompletedasdirectedbyShortonJuly20, 2011.

52. CapitalWineandSpiritsrecordsinreferencetotheJuly14, 2011, AllianceGolfOpendocumentedexpensesincurredatthePhiladelphiaCountryClubintheapproximateamountof $9,487.96.

a. ThebanquetinvoicegeneratedbythePhiladelphiaCountryClub (BookingNo. 017299) documentedabillingdateofJuly14, 2011.


b. Theinvoicedocumentedtheexpensebreakdownas:

Recap & Total CostsServices $ 2,691.55Resources $ 6,037.00ServiceChg $ 592.14SalesTax $ 167.27Total $ 9,487.96

1. Includedwithintheeventcostweregolfhats, shirts, andgolfgiftbagswithmiscellaneousitemsfortheparticipants.

c. ThecostoftheeventtoCapitalWineandSpiritsandeachAlliancesupplierwasapproximately $2,371.99 ($9,487.96 ÷ 4).

d. Thevalueofthegolfoutingbasedonamaximumoftwenty (20) individualsinattendancetotaledapproximately $474.40perindividual.

THEFOLLOWINGFINDINGSRELATETOSCHWENK’SRECEIPTOFGOLFTRIPSTHATHEWOULDNOTHAVEBEENINAPOSITIONTORECEIVEABSENTHISEMPLOYMENTWITHTHEPLCB.

53. ChristopherPaparielloiscurrentlyemployedastheExecutiveVice-PresidentofMajesticWineandSpirits (“Majestic”).

a. MajesticisownedbyAlliedBeverageGroup.

b. MajesticprovidesmerchandisingandpromotionalservicesasthebrokerrepresentativeofseveralmajorsuppliersincludingW.J. DeutschandSonsW.J. Deutsch”).

1. W.J. Deutschwasfoundedin1981tomarketwineandspiritsproducedfrommajorwineandspiritsregionsoftheworld.

54. BeauClarkisemployedwithW. J. DeutschasaPennsylvaniaDistrictManager.

a. AsthePennsylvaniaDistrictManagerforW. J. Deutsch, ClarkwasresponsiblefordevelopmentofthePennsylvaniamarketforbothonandoffpremisesales.

55. InoraboutAugust2010ClarkandPaparielloorganizedagolftriptoPebbleBeach, California.

a. ClarkandPappariellodiscussedPLCBemployeeJamesShortaccompanyingthemonthegolftrip.

b. W.J. Deutschwastocovertheexpensesassociatedwiththetrip.

c. ShortreceivedhisinvitationforthetripdirectlyfromPapariello.

d. SchwenkwasinformedbyShortthathewastoattend.

56. AtnotimedidPaparielloprovideanyinformationastothecostofthetriporwhetheranypaymentwasrequiredregardingexpensesassociatedwiththetrip.

a. BothSchwenkandShortwereinformedthatW.J. Deutschhadbudgetedfundstocoverthecostsassociatedwiththetrip.


b. Costsassociatedwiththetripincludedairfare, lodging, greensfees, subsistence, andentertainment.

57. ThedatesestablishedforthegolftriptoPebbleBeachcalledforSchwenkandShorttoarriveinCaliforniaonAugust26, 2010, anddepartCaliforniaonAugust28, 2010.

a. August26, 2010, (aThursday) andAugust27, 2010, (aFriday) wereregularlyscheduledworkdaysforCommonwealthemployees.

b. Schwenkutilizedatotaloffifteen (15) hoursofannualleavetoaccountforhisabsencefromworkonAugust26, 2010andAugust27, 2010.

58. LodgingaccommodationsaswellasgolfreservationsforthetripweremadebyClark.

a. Schwenk, Short, Papariello, andClarkstayedatTheLodgeatPebbleBeachlocatedat170017-MileDrive, PebbleBeach, California, onthenightsofAugust26, 2010, andAugust27, 2010.

b. Schwenk, Short, Papariello, andClarkplayedtwo (2) roundsofgolfatPebbleBeachGolfLinksandoneroundofgolfatSpyGlassGolfCourseduringthethreedaytrip.

c. ThetripwassubmittedasabusinessexpensebyClarkandPaparielloandwasconsideredamarketingevent.

59. NeitherSchwenknorShortmadeanypaymenttoeitherPaparielloorClarkforexpensesassociatedwiththethreedaygolftriptoPebbleBeach, California, eitherpriorto, during, orafterthetrip.

a. Theinitialminimumcostforthetripofatleast $6,497.46postedtoandwaspaidviaPapariello’scorporateAmericanExpressCreditCard.

1. ExpensesincurredbyMajesticrepresentativesviauseofcorporatecreditcardsarepaiddirectlybythecompany.

b. Approximately $6,000.00oftheminimum $6,497.46expenseforthegolftripwasultimatelyexpensedbacktoW.J. DeutschbyMajestic.

1. W.J. DeutschultimatelyprovidedDocumentNumber76845datedAugust31, 2011, toMajesticdocumentingtheissuanceofacredittoMajesticintheamountof $6,000.00forexpensesassociatedwiththetrip.

60. Expensesforthegolftriptotalingaminimumofapproximately $6,497.46postedtoPapariello’scorporateAmericanExpressCreditCardonAugust28, 2010, andAugust29, 2010, regardingallaccommodations/activitiesorganizedthroughTheLodgeatPebbleBeach.

a. Thevalueofthetripperindividualwasapproximately $1,624.37notincludingairfare ($6,497.46 ÷ 4).

62. Currentairfareforoneround-tripticketfromPhiladelphiaInternationalAirporttoSanJoseInternationalAirportwithonestopisapproximately $347.50.


a. NeitherPapariellonorhisemployerprovidedrecordsofairfareexpensesincurredforSchwenk.

63. BothShortandSchwenkacceptedthetravel, lodging, andhospitalityassociatedwiththegolftriptoPebbleBeach, California, fromentitiesconductingbusinesswiththePLCBatthetimeofthetrip.

64. Schwenkrealizedaprivatepecuniarygainofnolessthan $1,971.87inassociationwithhisacceptanceofanall-expensepaidthree (3) daygolftriptoPebbleBeachprovidedbyMajesticWineandSpirits/W. J. DeutschandSonsatatimewhenMajesticWineandSpiritsandW. J. DeutschandSonshadongoingbusinessdealingswiththePLCB.

a. Allexpensesassociatedwiththeeventincludingairfare, lodging, greensfees, subsistence, andentertainment, werepaidforbyMajesticWineandSpiritsand/orW.J. Deutsch.

THEFOLLOWINGFINDINGSRELATETOGOLFOUTINGSFORSCHWENKARRANGEDBYWHITEROCKDISTILLERIESREPRESENTATIVES.

65. TriciaBrungoandPaulDoranarecurrentlyemployedbyWesternSpiritsBeverageCompany (“WesternSpirits”) inthepositionsofControlledStatesManagerandRegionalSalesManagerrespectively.

a. CapitalWineandSpiritsservesasthedistributor/vendorforWesternSpiritsintheCommonwealthofPennsylvania.

66. PriortotheiremploymentwithWesternSpirits, BrungoandDoranwereemployedbyWhiteRockDistilleries (“WhiteRock”) inthepositionsofControlStateManagerandRegionalSalesManagerrespectively.

a. CapitalWineandSpiritsservedasthedistributor/vendorforWhiteRockintheCommonwealthofPennsylvania.

b. In2010, WhiteRockwasmarketingproductstothePLCBincludingThreeOlivesvodka.

1. BrungoandDoranmarketedproductstoPLCBofficialsincludingSchwenk.

67. WhiteRockisnotcurrentlyoperational.

a. WhiteRocksoldtherightstoallofitsbrandsandceasedoperationsasofJune1, 2012.

b. PaulCoulombewas/servedastheowner/ChiefExecutiveOfficerofWhiteRockpriortoitsclosing.

68. DuringoraboutFebruary2010, CoulombeinvitedJamesShort, BrungoandDoranWhiteRockrepresentatives), andDesmond (CapitalWineandSpirits

representative) tohisresidencenearNaples, Florida, foraweekendgolfoutingtooccuratBonitaBayEast.

a. Nomarketingorbusinesspurposeexistedforthetrip.

1. AllexpensesincurredbyBrungoandotherWhiteRockofficialswerereimbursedbyWhiteRock.


b. ThepurposeofthetripwasnotrelatedtoanyofficialPLCBpurpose.

c. ShortdirectedSchwenktoaccompanyhimonthetrip.

d. LodgingforSchwenkandShortwasprovidedbyCoulombeathispersonalresidencenearNaples, Florida.

69. ThedatesestablishedforthegolftriptoBonitaBaycalledforSchwenk, Short, andtheremaininginviteestoarriveinFloridaonThursday, February11, 2010, anddepartonSaturday, February13, 2010.

a. Thursday, February11, 2010, andFriday, February12, 2010, wereregularlyscheduledworkdaysforCommonwealthemployees.

70. SchwenkandShorttraveledtoFloridaonFebruary11, 2010, andplayedatleastoneroundofgolf (eighteenholes) withCoulombe, Brungo, Doran, andDesmondatBonitaBayduringthethree (3) daytrip.

a. Nospecificbusinessmeetingswereheldduringthethreedaytimeframe.

71. AllofSchwenk’sandShort’sexpensesassociatedwiththetrip (i.e. airfare, greensfees, meals, entertainment, etc.) werepaidforbyCoulombeand/orWhiteRockrepresentatives.

72. TotalexpensesforthegolftripsponsoredbyCoulombe/WhiteRockcouldnotbespecificallydeterminedduetothelackofrecordsprovidedbyWhiteRockregardingairfares, meals, greensfeesandentertainmentpaidforonbehalfofSchwenkandShort.

a. NospecificrecordscouldbelocateddetailingthecostsassociatedwiththetripwiththeexceptionoftwoentriesonBrungo’sexpensesummaryreportforFebruary13, 2010.

1. Brungo’sexpensereportforFebruary13, 2010, documentedcocktailspurchasedatTrulucksandVerginasfor $84.26and $88.30respectivelyforentertainmentregardingSchwenkandShort.

73. Currentairfareforoneround-tripticketfromPhiladelphiaInternationalAirporttoSouthwestFloridaInternationalAirport (a/k/aFortMeyersAirport) withonestopisapproximately $330.20.

a. AirtravelwasarrangedbyCoulombe.

74. SchwenkdidnotutilizeCommonwealthleaveofanytype (annualorpersonal) toaccountforthefifteen (15) hourabsencefromhisnormalworkinghoursonFebruary11, 2010, andFebruary12, 2010.

a. SchwenkwasinformedbyShortnottoutilizeleave.

b. Schwenkwentonthetripatthedirectionofhisimmediatesupervisor.

75. DuringoraboutNovember2011, CoulombeagaininvitedShort (PLCBrepresentatives), BrungoandDoran (WhiteRockrepresentatives), andDesmondCapitalWineandSpiritsrepresentative) tohisresidencenearNaples, Florida, foraweekendgolfoutingtooccuratBonitaBayEast.


a. NoPLCBbusinesspurposeexistedforthetrip.

1. AllexpensesrelatedtothetripwerepaidbyWhiteRock.

b. ShortinformedSchwenkthathewastoaccompanyhim.

76. ThedatesestablishedforthegolftriptoBonitaBaycalledforSchwenk, Short, andtheremaininginviteestoarriveinFloridaonThursday, December1, 2011, anddepartonSaturday, December3, 2011.

a. Thursday, December1, 2011, andFriday, December2, 2011, wereregularlyscheduledworkdaysforCommonwealthemployees.

b. Schwenkutilizedatotaloffifteen (15) hoursofannualleavetoaccountforhisabsencefromworkonDecember1, 2011, andDecember2, 2011.

77. LodgingaccommodationsweremadeonbehalfofSchwenkandShortattheHyattCoconutPointResortandSpalocatedat5001CoconutRoad, BonitaSprings, Florida, forthenightsofDecember1, 2011, andDecember2, 2011.

a. ThecostassociatedwithonenightoflodgingattheHyattCoconutPointResortandSpatotaledapproximately $354.31includingtaxesandfees.

b. ExpensesassociatedwithSchwenk’stwonightsoflodgingattheHyattCoconutPointResortandSpatotaledapproximately $708.62.

78. SchwenkandShorttraveledtoFloridaonDecember1, 2011, andfollowedthescheduleditineraryasdetailedbelow:

a. December1, 2011:

1. ArrivalatFortMeyersonDeltaAirlines: 11:36a.m. 2. Freetimetorelaxatthepoolorenjoyspaservice: 12:00-4:00p.m. 3. MeetinlobbyfortransfertoCoulombe’shouseforcocktails: 5:00p.m. 4. DinneratCapitalGrill: 7:00p.m.

b. December2, 2011:

1. MeetinlobbytodepartforlunchatBonitaBayEast: 10:15a.m. 2. GolfatBonitaBayEast: 12:30p.m. 3. Meetinlobbyfortransfertodinner: 6:30p.m. 4. DinneratHandsomeHarry’s: 7:00p.m.

c. December3, 2011:

1. DepartairportonDeltaAirlines: 11:06a.m.

d. NoPLCBbusinessmeetingswereheldduringthethreedaytimeframe.

79. AllofSchwenk’sandShort’sexpensesassociatedwiththetrip (e.g., airfare, greensfees, meals, entertainment, etc.) werepaidforbyCoulombeand/orWhiteRockrepresentatives.

80. TotalexpensesforthegolftripsponsoredbyCoulombe/WhiteRockcouldnotbefullydetermined, particularlyairfare, greensfeesandmealsandentertainment.


a. NospecificrecordswereprovidedbyWhiteRockdetailingthecostsassociatedwiththetrip, withtheexceptionofthreeentriesonBrungo’sexpensesummaryreportforDecember2, 2011.

1. Brungo’sexpensereportforDecember2, 2011, documentedmealspurchasedattheHyattintheamountof $405.73anddrinkspurchasedatHandsomeHarry’sintheamountof $69.80respectivelyforentertainmentregardingShort, Schwenk, Doran, andDesmond.

aa. Theapproximatecostwas $95.10perperson.

2. Brungo’sexpensereportfortheweekendingDecember2, 2011, documentlodgingfeestotaling $3,543.12inregardtolodginginBonitaSprings, Florida.

aa. BrungopaidforindividualroomsforSchwenk, Short, Desmond, Doran, andherselffortwonights ($354.31x5x2 = 3,543.10).

81. Currentairfareforoneround-tripticketfromPhiladelphiaInternationalAirporttoSouthwestFloridaInternationalAirport (a/k/aFortMeyersAirport) withonestopisapproximately $330.20.

a. WhiteRockrepresentativesconfirmed, inswornstatementstoCommissionInvestigators, payingforSchwenk’sairfarebutdidnotproviderecordsconfirmingtheexpenses.

82. SchwenkandShortacceptedthetravel, lodging, andhospitalityassociatedwiththegolftriptoBonitaBay, Florida, fromCoulombeatatimewhenWhiteRockandCapitalWineandSpiritswerethenconductingbusinesswiththePLCB.

83. ThetotalcostofSchwenk’sattendanceatthegolftripsisatleastasfollows:

2010: 2011: Drinks: $ 34.51 Room: $ 708.62Airfare: $ 330.20 Drinks: $ 95.11Wages: $ 409.80 Airfare: $ 330.20

Total: $ 774.51 Total: $ 1,133.93

a. Theseamountsdonotincludeallmeals, greens fees, andothertransportation.

b. Allexpensesassociatedwiththeevent, includingairfare, lodging, greensfees, subsistence, andentertainment, werepaidforbyWhiteRockDistilleriesrepresentatives.

84. InadditiontothegolftripstoBonitaBay, Schwenkwasprovidedwithmeals/hospitalityfromBrungoand/orDoranwhileSchwenkwasemployedasDirectorofProductSelection.

a. MostoftheseoffersweremadeinconjunctiontosimilaroffersmadetoJamesShort.

b. AbsentSchwenk’semploymentwiththePLCB, Schwenkwouldnothavebeeninapositiontoreceivethemeals/hospitalityfromBrungoand/orDoran, WhiteRockDistilleriesrepresentatives.


1. Thetotalspecificvalueofallthemeals/hospitalityreceivedbySchwenkfromBrungoand/orDorancouldnotbedetermined.

THEFOLLOWINGFINDINGSRELATETOSCHWENK’SGENERALRECEIPTOFGIFTSANDHOSPITALITYTHATHEWOULDNOTHAVEBEENINAPOSITIONTORECEIVEABSENTHISEMPLOYMENTWITHTHEPLCB.

85. VendorrepresentativesmakeregularappearancesatthePLCBofficeslocatedintheNorthwestOfficeBuilding, Harrisburg, Pennsylvania.

a. Primaryvendorsand/orsupplierswhomarketedproductstothePLCBwithwhomSchwenkinteractedonaregularbasisincludedCapitalWineandSpirits; SouthernWineandSpirits; MajesticWineandSpirits; WhiteRockDistilleries; BeamGlobalSpiritsandWine; andDiageo, amongothers.

1. SpecificrepresentativesSchwenkdealtwithfromtheprimaryvendorsincluded, inpart, thefollowing:

aa. CapitalWineandSpirits:

1. MarkLittles, President

2. ChristinaDesmond, DirectorofMarketingandBusinessAnalytics

bb. SouthernWineandSpirits:

1. BradWaxman, ExecutiveVicePresident, GeneralManager, SouthernWineandSpiritsofPA

cc. MajesticWineandSpirits:

1. ChristopherPapariello, ExecutiveVicePresident

dd. WhiteRockDistilleries:

1. TriciaBrungo, ControlStatesManager

2. PaulDoran, RegionalSalesManager

ee. BeamGlobalSpiritsandWine:

1. Erin (a/k/aRed) Schiller, PennsylvaniaStateAccountManager.

86. Aspartofthemarketingprocess, vendorrepresentativesroutinelyofferedandprovidedPLCBemployeeswithitemsofvalue, includingbutnotlimitedtothefollowing:

AlcoholMeals, includinglunchesanddinnersGolfoutingsOutofstategolftripsGiftcards/certificates


a. Schwenkacceptedgifts, hospitality, and/orotheritemsofeconomicvalueonaregularbasisfrommultiplevendorrepresentatives, includingbutnotlimitedto, Littles, Desmond, Waxman, Brungo, Doran, andSchiller.

b. Schwenkwasofferedmealsandgiftsbyvendorsduetohisposition(s) withthePLCB.

c. Schwenkwasprovideditemsbyvendorsinhisofficialcapacityaspartofthemarketingofproductsbyvendors.

87. SchwenkreceiveddirectionfromJamesShorttoacceptitems, includingalcohol, giftscards, golftrips, etc.

a. Schwenkwasawarethatemployeeswhodidnotacceptitemsofvalueprovidedbyvendorsweresubjecttoretaliationandthreatsofdismissal.

88. Schwenk, Short, andStevePollack, ChiefofthePLCBChairmanSelectProgram, maderegulartripstoCaliforniatopurchasewinefortheChairmanSelectProgram.

a. Priorto2010, thetripswouldincludetastingatvariouswineriesintheregion.

1. ThePLCBemployeeswouldbeaccompaniedbyPLCBvendormarketingrepresentativesfromCapital, MajesticandSouthern.

b. Inorabout2010, thetastingswerescheduledforahotelconferenceroom.

1. Vendorswouldarrangewineriestomakepresentationsoverthecourseofthree (3) days.

c. Followingadayoftesting, vendorrepresentativeswouldprovidedinnerforSchwenk, Short, andPollack.

1. TheprimaryvendorrepresentativesprovidingdinnerwerefromCapitalandMajestic.

d. Schwenkaccepteddinnersanddrinksannuallybetween2010and2012fromthesevendorswhowereattemptingtogetproductsselectedfortheChairman’sSelectProgram.

1. SchwenkwasadvisedbyShortthedinnerswerepartofPLCBbusiness.

89. WhileservinginthepositionofPLCBChiefofCategoryManagementandlaterastheDirectorofProductSelection, Schwenkreceivedandacceptedmeals/hospitalityand/orgifts duringChairmanSelectbuyingtripsfromLittlesand/orDesmond, representativesofCapitalWineandSpirits.

a. Littles’ expensesummariesidentifySchwenkasbeingpresentwhenmeals/hospitalitywereofferedtoPLCBemployees.

1. SpecificexpensescouldnotbedirectlyattributedtoSchwenk.

90. Desmond’sexpensesummariesdocumentmeals/hospitalityand/orgiftsprovidedtoSchwenk, asaPLCBemployee, asdetailedbelow:

Activity Net Description AdditionalTextDate Amount


Activity Net Description AdditionalTextDate Amount

11/03/2010 $ 75.00 Nordstromgiftforbuyer None

11/28/2011 $ 325.00 BumbleBeeHollow: giftfor Nonebuyer

02/15/2012 $ 200.00 Nordstrom: giftforbuyer None

a. SchwenkdoesnotrecallreceiptoftheNordstromgiftsanddeniesreceiptofsame.

91. Schwenkacceptedthemeals/hospitalityand/orgiftsfromLittlesand/orDesmondatatimewhenSchwenkwasresponsibleformakingrecommendationstothePLCBBoardregardingproductpurchasing, aswellaslistinganddelisting, ofproductsfromsuppliersrepresentedbyCapitalWineandSpirits.

a. AbsentSchwenk’semploymentwiththePLCB, Schwenkwouldnothavebeeninapositiontoreceivethemeals/hospitalityand/orgiftsfromLittlesand/orDesmond, PLCBvendorrepresentatives.

THEFOLLOWINGFINDINGSRELATETOALLEGATIONSTHATSCHWENKFAILEDTODISCLOSEHISRECEIPTOFGIFTS, TRANSPORTATION, LODGING, AND/ORHOSPITALITYONSTATEMENTSOFFINANCIALINTERESTSFILEDFORTHE2010THROUGH2011CALENDARYEARS.

92. StatementofFinancialInterests (“SFI”) filingrequirementsforpublicofficialsandpublicemployeesaremandatedbySection1104oftheStateEthicsAct, whichstrequiresapublicofficial/employeetofileanSFInolaterthanMay1 ofeachyearthathe/sheholdssuchapositionandtheyearafterleavingsuchaposition.

st93. SchwenkwasrequiredtofileStatementsofFinancialInterestsbyMay1 annuallyinhispositionasaPLCBMerchandisingandPricingCoordinator, PLCBChiefofCategoryManagement, andPLCBDirectorofMarketingandMerchandising.

94. InformationtobedisclosedonStatementsofFinancialInterestsfiledbypublicofficialsandpublicemployeesismandatedbySection1105oftheStateEthicsAct.

a. Section1105(b), Subsections1-10identifyspecificinformationtobedisclosed, aswellasexceptionstodisclosurerequirements, whenapplicable.

1. Section1105(b)(6) mandatesdisclosureofthefollowingonStatementsofFinancialinterestsfiled:

Thenameandaddressofthesourceandtheamountofanygiftorgiftsvaluedintheaggregateat $250ormoreandthecircumstancesofeachgift. Thisparagraphshallnotapplytoagiftorgiftsreceivedfromaspouse, parent, parentbymarriage, sibling, child, grandchild, otherfamilymemberorfriendwhenthecircumstancesmakeitclearthatthemotivationfortheactionwasapersonalorfamilyrelationship. However, forthepurposesofthisparagraph, thetermfriend” shallnotincludearegisteredlobbyistoranemployeeofa

registeredlobbyist.”


2. Section1105(b)(7) mandatesdisclosureofthefollowingonStatementsofFinancialinterestsfiled:

Thenameandaddressofthesourceandtheamountofanypaymentfororreimbursementofactualexpensesfortransportationandlodgingorhospitalityreceivedinconnectionwithpublicofficeoremploymentwheresuchactualexpensesfortransportationandlodgingorhospitalityexceed $650inanaggregateamountperyear. Thisparagraphshallnotapplytoexpensesreimbursedbyagovernmentalbodyortoexpensesreimbursedbyanorganizationorassociationofpublicofficialsoremployeesofpoliticalsubdivisionswhichthepublicofficialoremployeeservesinanofficialcapacity.”

95. SchwenkfiledStatementsofFinancialInterestsforcalendaryears2008through2012incompliancewithSection1104oftheStateEthicsActasfollows:

DateFiled CalendarYear03/04/2009 200804/01/2010 200903/01/2011 201003/05/2012 201103/31/2013 2012

a. Schwenkclaimedtohavereceivednogiftsvaluedatover $250.00intheaggregateforcalendaryears2008through2012inhispositionasthePLCBDirectorofMarketingandMerchandising.

1. Schwenk’scalendaryear2008through2012StatementsofFinancialInterestsalldocumented “none” inrelationtogiftsreceived.

b. Schwenkdisclosedtransportation, lodging, andhospitalityreceivedfromtheItalianWine & FoodInstitute (valueof $2,781.00) andtheSt. CroixRumCouncil (valuedat $4,000.00) onhis2009and2011calendaryearSFIsrespectively.

1. Noadditionalreceiptoftransportation, lodging, andhospitalitywasdisclosedonSchwenk’s2009and2011calendaryearSFIs.

2. Schwenk’s2008, 2010, and2012calendaryearStatements ofFinancialInterestsdocumented “none” inrelationtotransportation, lodging, andhospitalityreceived.

c. Schwenk’ssignatureispresentoneachStatementofFinancialInterestsfiled, signifyingthattheinformationprovidedontheformistrueandcorrecttothebestofhisknowledge, information, andbeliefsubjecttopenaltiesprescribedby18Pa.C.S. § 4904 (unswornfalsificationtoauthorities) andthePublicOfficialandEmployeeEthicsAct, 65Pa.C.S. § 1109(b).

96. Schwenkfailedtodisclosethenameandaddressofthesourceandtheamountofgiftsreceivedvaluedintheaggregateat $250ormorefromvendorsdoingbusinesswiththePLCBandthecircumstancesofeachgiftonhisStatementsofFinancialInterestsfiledforcalendaryear2011.

a. SchwenkfailedtodisclosegiftsreceivedfromChristineDesmond, CapitalWine & Spiritsrepresentative, inthetotalamountof $325.00in2011.

97. Schwenkfailedtodisclosethenameandaddressof \[sic\] anypaymentforor


reimbursementofactualexpensesfortransportationandlodgingorhospitalityreceivedinexcessof $650.00 intheaggregateperyearfromvendorsdoingbusinesswiththePLCBonhisStatementsofFinancialInterestsfiledforcalendaryears2010and2011asdocumentedbelow:

Year Source Description MinimumValue

2010 PaulCoulombe, WhiteRock ThreedaygolftriptoBonita Bay, $ 650.00+ Florida/Naples, Floridaareaplusroundtripairfare

2010 BeauClark, W.J. Duetsch ThreedaygolftriptoPebbleBeach, CA, $1,971.87allexpensespaid

2011 PaulCoulombe, WhiteRock ThreedaygolftriptoBonitaBay, $1,133.93Florida/Naples, Floridaarea, allexpensespaid

a. Nospecificexpensedocumentswereprovidedbythevendorforthe2010golftriptotheBonitaBay/Naplesarea.

1. Additionaltransportation/lodging/hospitalityassociatedwiththetripincludedlodgingatCoulombe’shomeforthreedaysandtwonights, allmeals, greensfeesforeighteenholesofgolf, andentertainmentexpenses.


III. DISCUSSION:

AstheDirectorofProductSelectionforthePennsylvaniaLiquorControlBoardPLCB”) fromapproximatelyJuly2010untilJanuary2013, RespondentMatthewSchwenk,

hereinafteralsoreferredtoas “Respondent,” “RespondentSchwenk,” and “Schwenk,” hasbeenapublicofficial/publicemployeesubjecttotheprovisionsofthePublicOfficialandEmployeeEthicsAct (“EthicsAct”), 65Pa.C.S. § 1101etseq.

TheallegationsarethatSchwenkviolatedSections1103(a) and1105(b) oftheEthicsAct, 65Pa.C.S. §§ 1103(a) and1105(b): (1) whenheusedtheauthorityofhispublicpositionfortheprivatepecuniarybenefitofhimselfbysolicitingand/oracceptingitemsofvaluefromvendorsofthePLCBatatimewhenhewasresponsiblefor, andparticipatedin, PLCBdecisionstoplacevendorproductsinPLCBliquorstores; (2) whenhesolicitedand/oracceptedtravel/hospitality/lodgingfromCommonwealthvendors; and3) whenhefailedtodiscloseonStatementsofFinancialInterests (“SFIs”) hisreceiptof

gifts, transportation, lodgingandhospitalityforcalendaryears2010through2012.

PursuanttoSection1103(a) oftheEthicsAct, apublicofficial/publicemployeeisprohibitedfromengaginginconductthatconstitutesaconflictofinterest:

1103. Restrictedactivities

a) Conflictofinterest.— Nopublicofficialorpublicemployeeshallengageinconductthatconstitutesaconflictofinterest.

65Pa.C.S. § 1103(a).

Theterm "conflictofinterest" isdefinedintheEthicsActasfollows:

1102. Definitions

Conflict" or "conflictofinterest." Usebyapublicofficialorpublicemployeeoftheauthorityofhisofficeoremploymentoranyconfidentialinformationreceivedthroughhisholdingpublicofficeoremploymentfortheprivatepecuniarybenefitofhimself, amemberofhisimmediatefamilyorabusinesswithwhichheoramemberofhisimmediatefamilyisassociated. Thetermdoesnotincludeanactionhavingademinimiseconomicimpactorwhichaffectstothesamedegreeaclassconsistingofthegeneralpublicorasubclassconsistingofanindustry, occupationorothergroupwhichincludesthepublicofficialorpublicemployee, amemberofhisimmediatefamilyorabusinesswithwhichheoramemberofhisimmediatefamilyisassociated.

65Pa.C.S. § 1102.

Section1103(a) oftheEthicsActprohibitsapublicofficial/publicemployeefromusingtheauthorityofpublicoffice/employmentorconfidentialinformationreceivedbyholdingsuchapublicpositionfortheprivatepecuniarybenefitofthepublicofficial/publicemployeehimself, anymemberofhisimmediatefamily, orabusinesswithwhichheoramemberofhisimmediatefamilyisassociated.

Section1105(a) oftheEthicsActprovidesthattheStatementofFinancialInterestsshallbefiledontheformprescribedbythisCommission; thatallinformationrequestedon


theformshallbeprovidedtothebestoftheknowledge, informationandbeliefofthefiler; andthattheformshallbesignedunderoathorequivalentaffirmation.

Section1105(b) oftheEthicsActanditssubsectionsdetailthefinancialdisclosurethatapersonrequiredtofiletheStatementofFinancialInterestsformmustprovide.

Subjecttocertainstatutoryexceptionsnotapplicabletothismatter, Section1105(b)(6) oftheEthicsActrequiresthefilertodiscloseontheStatementofFinancialIntereststhenameandaddressofthesourceandtheamountofanygiftorgiftsvaluedintheaggregateat $250ormoreandthecircumstancesofeachgift.

Subjecttocertainstatutoryexceptionsnotapplicabletothismatter, Section1105(b)(7) oftheEthicsActrequiresthefilertodiscloseontheStatementofFinancialIntereststhenameandaddressofthesourceandtheamountofanypaymentfororreimbursementofactualexpensesfortransportationandlodgingorhospitalityreceivedinconnectionwithpublicofficeoremploymentwheresuchactualexpensesexceed $650inanaggregateamountperyear.

Asnotedabove, thepartieshavesubmittedaConsentAgreementandStipulationofFindings. Theparties' StipulatedFindingsaresetforthaboveastheFindingsofthisCommission. Weshallnowsummarizetherelevantfactsascontainedtherein.

RespondentSchwenkheldmultiplepositionsduringhistenurewiththePLCBincludingClerk, ManagementAnalyst, MerchandisingandPricingCoordinator, andChiefofCategoryManagement. SchwenkservedastheDirectorofProductSelectionforthePLCBfromapproximatelyJuly2010untilJanuary2013. Inthiscapacity, SchwenkreporteddirectlytoJamesShort (“Short”), PLCBDirectorofMarketingandMerchandising.

Schwenk’sjobdescriptionforthepositionofDirectorofProductSelectionforthePLCBincluded, inter alia, thefollowingresponsibilitiesandduties: (1) planning, developing, directing, andcoordinatingthePLCB’scomprehensivestatewidemarketingandmerchandisingprograms/functions; (2) developing, implementing, andevaluatingpoliciesandoperationalprocedurestoensuretheefficientmarketingofregularlylistedandluxurywineandspiritsproducts; (3) directingacentralizedmarketingandmerchandisingprogram; (4) advisingonproposedpolicychangesforimprovedagencyprofitability; (5) presentinganalysisofsupplierproposalstoaddproductsandmakingrecommendationstotheDirectorofMarketingforprospectivenewproductintroductionortrial, orrecommendationsfordiscontinuationofcurrentlyofferedproducts; and (6) leadingnegotiationswithvendorsonproductpromotionproposalsinvolvingdiscounts, rebates, incentives, luxuryitems, orone-timebuys.

ThePLCBisgovernedbyathree-MemberBoard. ThePLCBregulatesthesaleofalcoholinPennsylvania. InorderforanalcoholicbeveragetobesoldinPennsylvania, itmustbeauthorizedforsalebythePLCB. ThePLCBistheonlyretailsellerofwine/spiritsintheCommonwealth.

ThePLCBaddsandremovesproductssoldinPLCBretailstoresthroughaprocessknownas “listing” and “delisting.” ThepartieshavestipulatedthatthePLCBDirectorofMarketingandMerchandising, ChiefoftheProductManagementandPricingDivision, andMerchandisingPricingCoordinator(s) areusuallyresponsibleforevaluatingnewproducts. TheDirectorofMarketingandMerchandisingandtheChiefoftheProductManagementandPricingDivisionmakethefinalrecommendationtothePLCBBoardMembersastowhatproduct(s) shouldbelistedordelisted. ThePLCBrelied primarilyonrecommendationsmadebyShort, theDirectorofMarketingandMerchandising, andhissubordinates, includingSchwenkastheDirectorofProductSelection, whenmaking


listing/delistingdecisions. TheBoardconductednoindependentreviewofproductsandreliedonstaffrecommendations.

Amanufacturer/supplierofalcoholicbeverageproductsmaymarketitsproductstothePLCBdirectlyorthroughavendororbroker. TheprimaryvendorsprovidingproductstothePLCBare: (1) SouthernWineandSpirits (“Southern”); (2) CapitalWineandSpirits

Capital”); and (3) AlliedBeverageGroup, LLC (“Allied”), whichhasasubsidiarynamedMajesticWine & Spirits, USA, LLC” (“Majestic”).

ProductsforwhichSouthernservesasbrokerand/orvendor/vendorofrecordaccountforapproximately6.43% to6.85% ofthePLCBtotalCostofGoodsSoldduringthelastfive (5) years.

Capitalisamemberofthe “CharmerSunbeltGroup,” anationwidedistributorofwine, spirits, beer, andotherbeverages. ProductsbrokeredbyCapitalaccountforatotalofapproximately19.11% to22.03% ofthePLCBtotalCostofGoodsSoldduringthelastfive (5) years. InPennsylvania, Capital/CharmerSunbeltGrouprepresentsamarketingpartnershipnamed “theAlliance,” whichiscomprisedofwine/spiritsuppliersBacardiUSA

Bacardi”), Brown-Forman, andRemyCointreau (“Remy”). Capitalalsopreviouslyrepresented WhiteRockDistilleries, aformersupplierofalcohol/spiritstotheCommonwealthofPennsylvania.

AlliedwascreatedbythemergersofTheBaxterGroup, Inc., F&ADistributingCompanyandTheJaydorCorporation. AlliedranksamongthetenlargestwineandspiritsdistributorsintheUnitedStates. AlliedsubsidiaryMajesticisaPennsylvaniabrokerageandvendor/vendorofrecordforproductssoldtothePLCB. Allied’sand/orMajestic’ssalesaccountforapproximately1.51% to2.18% ofPLCBtotalCostofGoodsSoldduringthelastfive (5) years.

ExecutivesandmarketingrepresentativesfromvendorssupplyingproductstothePLCBwouldmeetwithPLCBemployeestomarketproducts. ThoserepresentativesofferedgiftsandhospitalitytoPLCBrepresentatives. Theseitemswereofferedwhenlisting/delistingofproductswasoccurring. ItemsofvaluewereroutinelyprovidedtoPLCBofficialsindecisionmakingpositionsregardingproductselectionandplacement.

RepresentativesofthenumerousPLCBvendorsfrequentlycontactedSchwenkandvariousotherPLCBrepresentativestomarketnewandexistingproducts. Someoftheseproductsweresubjecttothelisting/delistingprocess. Otherproductswereluxuryproductswhicharenotsubjecttolisting/delistingprocedures.

Primaryvendorsand/orsupplierswhomarketedproductstothePLCBwithwhomSchwenkinteractedonaregularbasisincludedCapital, Southern, Majestic, WhiteRockDistilleries (“WhiteRock”); BeamGlobalSpiritsandWine (“Beam”); andDiageo. SpecificrepresentativeswithwhomSchwenkdealtincludedthefollowing: MarkLittles (“Littles”), PresidentofCapital; CristinaDesmond (“Desmond”), DirectorofMarketingandBusinessAnalyticsforCapital; BradM. Waxman (“Waxman”), ExecutiveVicePresident, GeneralManagerofSouthern WineandSpiritsofPA; ChristopherPapariello (“Papariello”), ExecutiveVice-PresidentofMajestic; TriciaBrungo (“Brungo”), ControlStatesManagerofWhiteRock; PaulDoran (“Doran”), RegionalSalesManagerofWhiteRock; andErin (a/k/aRed”) Schiller, PennsylvaniaStateAccountManagerofBeam.

In2009, 2010, and2011, Capital/Allianceheld golfoutingsreferredtoastheAllianceGolfOpen,” whichincludedofficialsandmanagementemployeesofthePLCB.

TheAllianceGolfOpenwasorganizedasameansbywhichCapitalandtheAlliancesupplierscouldstrengthentheirrelationshipwiththePLCBandtoallowvariousAllianceseniormanagementofficialstohave “facetime” withPLCBofficials. Theseeventswereprimarilysocialinnature. NospecificbusinesspresentationsweremadebyCapitaland/or


theAlliancesuppliersattheevents. Thecostsassociatedwiththe2009, 2010, and2011AllianceGolfOpenweredividedintofourequalamountspaidbyCapital, Bacardi, Brown- Forman, andRemy. Schwenkattendedallthreeevents.

The2009AllianceGolfOpenwasheldattheWestShoreCountyClubinCampHill, Pennsylvania, onAugust19, 2009. PLCBattendeesattheeventincludedPLCBCEOJoeConti (“Conti”), Short, andSchwenk. SchwenkattendedthiseventatthedirectionofShort. Schwenkbelievedtheeventwas “workrelated” ashewasadvisedtoattendbyShortandthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial. Thevalueofthegolfoutingtotaledapproximately105.09perindividual.

The2010AllianceGolfOpenwasheldattheRiverCrestGolfClubinPhoenixville, Pennsylvania, onJuly15, 2010. PLCBattendeesattheeventincludedShort, SchwenkandPLCBChairmanP.J. Stapleton. SchwenkattendedthiseventatthedirectionofShort. Schwenkbelievedtheeventwas “workrelated” ashewasdirectedtoattendbyShortandthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial. Thevalueofthegolfoutingtotaledapproximately $490.87perindividual. Additionally, atShort’sdirection, SchwenksubmittedaCommonwealthTravelExpenseVoucher (“TEV”) claimingreimbursementfromtheCommonwealthforpurportedbusinessexpensestotaling $195.24forthistrip.

The2011 AllianceGolfOpenwasheld atthePhiladelphiaCountryClubinGladwyne, Pennsylvania, onJuly14, 2011. PLCBattendeesattheeventincludedShort, Conti, Schwenk, Stapleton, andDougHitz, PLCBBureauDirectorforPlanningandProcurement. SchwenkwasauthorizedtoattendthiseventbyShort. Schwenkbelievedtheeventwas “workrelated” andthereforedidnotutilizeleaveorvacationtime, norwasheinstructedtodosobyShortoranyotherPLCBofficial. Theexpensesofthegolfoutingtotaledapproximately $474.40perattendee. Additionally, atShort’sdirection, SchwenksubmittedaTEVclaimingreimbursementfromtheCommonwealthforpurportedbusinessexpensestotaling $130.20forthistrip.

MajesticisthebrokerrepresentativeofsupplierW.J. DeutschandSons (“W.J. Deutsch”). InAugust2010, ShortandSchwenkattendedanall-expensepaidthreedaygolftriptoPebbleBeach, California, providedbyMajestic/W. J. Deutsch, avendordoingbusinesswiththePLCB. SchwenkwasinformedbyShortthathewastoattend. Short, Schwenk, Papariello, andBeauClark (“Clark”), thePennsylvaniaDistrictManagerforW. J. Deutsch, participatedintheevent. ThetripwassubmittedasabusinessexpensebyClarkandPapariello. Costsassociatedwiththetripincludedairfare, lodging, greensfees, subsistence, andentertainment. ThepartieshavestipulatedthatSchwenkrealizedaprivatepecuniarygainofatleast $1,971.87inassociationwithhisacceptanceoftheall- expensepaidthreedaygolftriptoPebbleBeachprovidedbyMajestic/W. J. DeutschatatimewhenMajestic/W.J. DeutschandSonshadongoingbusinessdealingswiththePLCB.

In2010and2011, ShortandSchwenkattendedtwoall-expensepaidthreedaygolftripstoBonitaBayEast, Florida, attheinvitationofPaulCoulombe (“Coulombe”), thentheowner/CEOofWhiteRock. ShortdirectedorinformedSchwenkthatSchwenkwastoaccompanyShortonthesetrips. NoPLCBbusinesspurposeexistedforthesetrips, andnoPLCBbusinessmeetingswereheldaspartofeitherofthesetrips. SchwenkwasinformedbyShortnottoutilizeleaveforthe2010trip. Schwenkutilizedatotaloffifteen15) hoursofannualleavetoaccountforhisabsencefromworkduringthe2011trip. Allof

Short’sandSchwenk’sexpensesassociatedwiththesetrips (airfare, greensfees, meals, entertainment, andthelike) werepaidforbyCoulombe, WhiteRockand/orWhiteRockrepresentatives. ThepartieshavestipulatedthatthecostofSchwenk’sattendanceattheaforesaidtwoall-expensepaid, threedaygolftripstoBonitaBaywasatleast $774.51forthe2010tripandatleast $1,133.93forthe2011trip.


InadditiontothegolftripstoBonitaBay, Schwenkwasprovidedwithmeals/hospitalityfromthenWhiteRockrepresentativesBrungo and/orDoran whileSchwenkwasemployedasDirectorofProductSelection. MostoftheseoffersweremadeinconjunctiontosimilaroffersmadetoShort. AbsentSchwenk’semploymentwiththePLCB, Schwenkwouldnothavebeeninapositiontoreceivethemeals/hospitalityfromBrungoand/orDoran, WhiteRockrepresentatives. Thetotalspecificvalueofallthemeals/hospitalityreceivedbySchwenkfromBrungoand/orDorancouldnotbedetermined.

VendorrepresentativesmakeregularappearancesatthePLCBofficeslocatedintheNorthwestOfficeBuilding, Harrisburg, Pennsylvania. Aspartofthemarketingprocess, vendorrepresentativesroutinelyofferedandprovidedPLCBemployeeswithitems ofvalue, includingbutnotlimitedtoalcohol, meals, golfoutings, outofstategolftripsandgiftcards/certificates. Schwenkacceptedgifts, hospitality, and/orotheritemsofeconomicvalueonaregularbasisfrommultiplevendorrepresentatives, includingbutnotlimitedto, Littles, Desmond, Waxman, Brungo, Doran, andSchiller. Schwenkwasofferedmealsandgiftsbyvendorsduetohisposition(s) withthePLCB. Schwenkwasprovideditemsbyvendorsinhisofficialcapacityaspartofthemarketingofproductsbyvendors.

SchwenkreceiveddirectionfromShorttoacceptitems, includingalcohol, giftscards, golftrips, andthelike. Schwenkwasawarethatemployeeswhodidnotacceptitemsofvalueprovidedbyvendorsweresubjecttoretaliationandthreatsofdismissal.

Schwenk, Short, andStevePollack, ChiefofthePLCBChairmanSelectProgram, maderegulartripstoCaliforniatopurchasewinefortheChairmanSelectProgram.

Between2010and2012, Schwenk accepteddinnersanddrinksfromvendorsduringtripstoCaliforniatopurchasewineforthePLCB’sChairmanSelectProgram. ThesevendorswereattemptingtogetproductsselectedfortheChairman’sSelectProgram. SchwenkwasadvisedbyShortthedinnerswerepartofPLCBbusiness.

Littles’ expensesummariesidentifySchwenkasbeingpresentwhenmeals/hospitalitywereofferedtoPLCBemployees. SpecificexpensescouldnotbedirectlyattributedtoSchwenk.

Desmond’sexpensesummariesdocumentthefollowingitemsprovidedtoSchwenk, asaPLCBemployee:

Activity Net DescriptionDate Amount

11/03/2010 $ 75.00 Nordstromgiftforbuyer

11/28/2011 $ 325.00 BumbleBeeHollow: giftforbuyer

02/15/2012 $ 200.00 Nordstrom: giftforbuyer

SchwenkdoesnotrecallreceiptoftheNordstromgiftsanddeniesreceiptofsame.

Schwenkacceptedthemeals/hospitalityand/orgiftsfromLittlesand/orDesmondatatimewhenSchwenkwasresponsibleformakingrecommendationstothePLCBBoardregardingproductpurchasing, aswellaslistinganddelistingofproductsfromsuppliersrepresentedbyCapital.

AbsentSchwenk’semploymentwiththePLCB, Schwenkwouldnothavebeeninapositiontoreceivethemeals/hospitalityand/orgiftsfromLittlesand/orDesmond, PLCBvendorrepresentatives.


Duringtherelevanttimeperiod, SchwenkwasrequiredtoannuallyfileanSFIbystMay1. SchwenkfiledSFIsforcalendaryears2008through2012. Schwenkclaimedtohavereceivednogiftsvaluedatover $250.00intheaggregateforCalendarYears2008through2012inhispositionasthePLCBDirectorofMarketingandMerchandising. Schwenkfailedtodisclosethenameandaddressofthesourceandtheamountofgiftsreceivedvaluedintheaggregateat $250ormorefromvendorsdoingbusinesswiththePLCBandthecircumstancesofeachgiftonhisStatementsofFinancialInterestsfiledforcalendaryear2011. SchwenkfailedtodisclosegiftsreceivedfromDesmondinthetotalamountof $325.00in2011.

SchwenkfailedtodiscloseonhisSFIsfiledforcalendaryears2010and2011requiredinformationastoreportabletransportationandlodgingorhospitalityhereceivedfromPLCBvendorsasdetailedbelow:

Year Source Description MinimumValue

2010 PaulCoulombe, WhiteRock ThreedaygolftriptoBonitaBay, $650.00+ Florida/Naples, Floridaareaplusroundtripairfare

2010 BeauClark, W.J. Duetsch ThreedaygolftriptoPebbleBeach, CA, $1,971.87allexpensespaid

2011 PaulCoulombe, WhiteRock ThreedaygolftriptoBonitaBay, $1,133.93Florida/Naples, Floridaarea, allexpensespaid

HavinghighlightedtheStipulatedFindingsandissuesbeforeus, weshallnowapplytheEthicsActtodeterminetheproperdispositionofthiscase.

Theparties' ConsentAgreementsetsforthaproposedresolutionoftheallegationsasfollows:

3. TheInvestigativeDivisionwillrecommendthefollowinginrelationtotheaboveallegations:

a. That, aspartofanegotiatedsettlementagreement, noviolationofSection1103(a) ofthePublicOfficialandEmployeeEthicsAct, 65Pa.C.S. § 1103(a), occurredinrelationtoSchwenk’sreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB; and

b. ThataviolationofSection1105(b) ofthePublicOfficialandEmployeeEthicsAct, 65Pa.C.S. § 1105(b), occurredinrelationto Schwenk’sneglecttoreportreceiptofgifts, transportation, lodging, and/orhospitalityfromvendor(s) ofthePLCB, uponStatementsofFinancialInterestsfiledforthe2010through2011calendaryears.

1. Noreportingviolationoccurredforcalendaryear2012, asinsufficientevidenceexiststosupportafindingofaviolationofSection1105(b).

4. Schwenkagreestomakepaymentintheamountof $500.00insettlementofthismatterpayabletotheCommonwealthofPennsylvaniaandforwardedtothePennsylvaniaStateEthics


Commissionwithinthirty (30) daysoftheissuanceofthefinaladjudicationinthismatter.

5. SchwenkagreestofilecompleteandaccurateamendedStatementsofFinancialInterestswiththePennsylvaniaLiquorControlBoardthroughthePennsylvaniaStateEthicsCommission, for2010and2011calendaryearswithinthirty30) daysoftheissuanceofthefinaladjudicationinthis

matter.

6. Schwenkagreestonotacceptanyreimbursement, compensationorotherpaymentfromtheCommonwealthofPennsylvaniarepresentingafullorpartialreimbursementoftheamountpaidinsettlementofthismatter.

7. TheInvestigativeDivisionwillrecommendthattheStateEthicsCommissiontakenofurtheractioninthismatter; andmakenospecificrecommendationstoanylawenforcementorotherauthoritytotakeactioninthismatter. Such, however, doesnotprohibittheCommissionfrominitiatingappropriateenforcementactionsintheeventofRespondent'sfailuretocomplywiththisagreementortheCommission'sorderorcooperatingwithanyotherauthoritywhomaysochoosetoreviewthismatterfurther.

ConsentAgreement, at1-2.

Aspartofanegotiatedsettlementagreement, thepartieshaverecommendedthatthisCommissionfindthatnoviolationofSection1103(a) oftheEthicsAct, 65Pa.C.S. § 1103(a), occurredinrelationtoSchwenk’sreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB. ItisclearthatSchwenk’sreceiptofsuchitemsoccurredatthedirectionorwiththeauthorizationofhisimmediatesupervisor, Short. Schwenkattendedthe2009, 2010and2011AllianceGolfOpen, theAugust2010golftriptoPebbleBeach, California, andthe2010and2011golftripstoBonitaBayEast, Florida, atthedirectionorwiththeauthorizationofShort. Schwenkacceptedgifts, hospitality, and/orotheritemsofeconomicvalueonaregularbasisfrommultiplevendorrepresentatives. ThepartieshavestipulatedthatSchwenkreceiveddirectionfromShorttoacceptitems, includingalcohol, giftscards, golftrips, andthelike, andthatSchwenkwasawarethatemployeeswhodidnotacceptitemsofvalueprovidedbyvendorsweresubjecttoretaliationandthreatsofdismissal.

OneoftheelementsforestablishingaviolationofSection1103(a) oftheEthicsActisuseoftheauthorityofthepublicposition. Inthiscase, Schwenk’sacceptanceofgifts, hospitality, and/orotheritemsofeconomicvaluefromPLCBvendorsoccurredatthedirectionandwiththeauthorizationofhisimmediatesupervisor, Short.

BasedupontheStipulatedFindingsandConsentAgreement, weaccepttherecommendationoftheparties, andweholdthatperthenegotiatedsettlementagreementoftheparties, noviolationofSection1103(a) oftheEthicsAct, 65Pa.C.S. § 1103(a), occurredinrelationtoSchwenk’sreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB.

Thepartieshaveagreed, andwehold, thataviolationofSection1105(b) oftheEthicsAct, 65Pa.C.S. § 1105(b), occurredinrelationtoSchwenk’sneglecttoreportreceiptofgifts, transportation, lodging, and/orhospitalityfromvendor(s) ofthePLCB, uponSFIsfiledforthe2010through2011calendaryears.


Weaccepttheparties’ recommendationandweholdthatnoreportingviolationoccurredforcalendaryear2012, asinsufficientevidenceexiststosupportafindingofaviolationofSection1105(b), 65Pa.C.S. § 1105(b).

AspartoftheConsentAgreement, Schwenkhasagreedtomakepaymentintheamountof $500.00insettlementofthismatterpayabletotheCommonwealthofPennsylvaniaandforwardedtothisCommissionwithinthirty (30) daysoftheissuanceofthefinaladjudicationinthismatter.

Schwenkhasagreedtonotacceptanyreimbursement, compensationorotherpaymentfromtheCommonwealthofPennsylvaniarepresentingafullorpartialreimbursementoftheamountpaidinsettlementofthismatter.

SchwenkhasagreedtofilecompleteandaccurateamendedSFIswiththePLCBthroughthisCommissionforthe2010and2011calendaryearswithinthirty (30) daysoftheissuanceofthefinaladjudicationinthismatter.

WedeterminethattheConsentAgreementsubmittedbythepartiessetsforthaproperdispositionforthiscase, baseduponourreviewasreflectedintheaboveanalysisandthetotalityofthefactsandcircumstances.

Accordingly, pertheConsentAgreementoftheparties, Schwenkisdirectedtomakepaymentintheamountof $500.00payabletotheCommonwealthofPennsylvaniathandforwardedtothisCommissionbynolaterthanthethirtieth (30) dayafterthemailingdateofthisadjudicationandOrder.

PertheConsentAgreementoftheparties, Schwenkisdirectedtonotacceptanyreimbursement, compensationorotherpaymentfromtheCommonwealthofPennsylvaniarepresentingafullorpartialreimbursementoftheamountpaidinsettlementofthismatter.

Totheextenthehasnotalreadydoneso, SchwenkisdirectedtofilecompleteandaccurateamendedSFIsforthe2010and2011calendaryearswiththePLCB, throughthisthCommission, bynolaterthanthethirtieth (30) dayafterthemailingdateofthisadjudicationandOrder.

CompliancewiththeforegoingwillresultintheclosingofthiscasewithnofurtheractionbythisCommission. Noncompliancewillresultintheinstitutionofanorderenforcementaction.

IV. CONCLUSIONSOFLAW:

1. AstheDirectorofProductSelectionforthePennsylvaniaLiquorControlBoardPLCB”) fromapproximatelyJuly2010untilJanuary2013, RespondentMatthew

Schwenk (“Schwenk”) hasbeenapublicofficial/publicemployeesubjecttotheprovisionsofthePublicOfficialandEmployeeEthicsAct (“EthicsAct”), 65Pa.C.S.

1101etseq.

2. Perthenegotiatedsettlementagreementoftheparties, noviolationofSection1103(a) oftheEthicsAct, 65Pa.C.S. § 1103(a), occurredinrelationtoSchwenk’sreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB.

A3. violationofSection1105(b) oftheEthicsAct, 65Pa.C.S. § 1105(b), occurredinrelationtoSchwenk’sneglecttoreportreceiptofgifts, transportation, lodging, and/orhospitalityfromvendor(s) ofthePLCB, uponStatementsofFinancialInterestsfiledforthe2010through2011calendaryears.


4. Noreportingviolationoccurredforcalendaryear2012, asinsufficientevidenceexiststosupportafindingofaviolationofSection1105(b), 65Pa.C.S. § 1105(b).

InRe: MatthewSchwenk, : FileDocket: 13-008Respondent : DateDecided: 6/16/14

DateMailed: 7/10/14

ORDERNO. 1641

1. Perthenegotiatedsettlementagreementoftheparties, MatthewSchwenkSchwenk”)--apublicofficial/publicemployeeinhiscapacityastheDirectorof

ProductSelectionforthePennsylvaniaLiquorControlBoard (“PLCB”) fromapproximatelyJuly2010untilJanuary2013--didnotviolateSection1103(a) ofthePublicOfficialandEmployeeEthicsAct (“EthicsAct”), 65Pa.C.S. § 1103(a), inrelationtohisreceiptofgifts, transportation, lodging, and/orhospitalityfromvendorsofthePLCB.

A2. violationofSection1105(b) oftheEthicsAct, 65Pa.C.S. § 1105(b), occurredinrelationtoSchwenk’sneglecttoreportreceiptofgifts, transportation, lodging, and/orhospitalityfromvendor(s) ofthePLCB, uponStatementsofFinancialInterestsfiledforthe2010through2011calendaryears.

3. Noreportingviolationoccurredforcalendaryear2012, asinsufficientevidenceexiststosupportafindingofaviolationofSection1105(b), 65Pa.C.S. § 1105(b).

PertheConsentAgreementoftheparties, Schwenkisdirectedtomakepaymentin4. theamountof $500.00payabletotheCommonwealthofPennsylvania andforwardedtothePennsylvaniaStateEthicsCommissionbynolaterthantheththirtieth (30) dayafterthemailingdateofthisOrder.

PertheConsentAgreementoftheparties, Schwenkisdirectedtonotacceptany5. reimbursement, compensationorotherpaymentfromtheCommonwealthofPennsylvaniarepresentingafullorpartialreimbursementoftheamountpaidinsettlementofthismatter.

Totheextenthehasnotalreadydoneso, Schwenkisdirectedtofilecompleteand6. accurateamendedStatementsofFinancialInterestsforthe2010and2011calendaryearswiththePLCB, throughthePennsylvaniaStateEthicsCommission, thbynolaterthanthethirtieth (30) dayafterthemailingdateofthisOrder.

Compliancewithparagraphs4, 5, and6ofthisOrderwillresultintheclosingofthis7. casewithnofurtheractionbythisCommission.

a. Non-compliancewillresultintheinstitutionofanorderenforcementaction.

BYTHECOMMISSION,

JohnJ. Bolger, Chair

Ethics Panel Adjudication for Matthew Schwenk

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